cdss

For much of this decade, they have been celebrated as a means of spreading risk around the financial system.

In another email, he said Goldman should reduce prices on CDSs to "cause maximum pain" on existing holders of credit insurance.

And a third was to cut the risk of borrowers defaulting, using CDSs with insurers like American International Group.

An intriguing aspect of CDSs is that you can buy them even if you do not own any debt from the company that they refer to.

The cause of this turn of events is the proliferation of CDSs on the company's debt.

From almost nothing just a few years ago, CDSs grew at an explosive rate until recently (see chart 2).

Using CDSs to destabilize a government was "counter-productive" , he said.

The fact that, unlike insurance, CDSs are tradeable contracts does not change the fundamental economic rationale.

Economically, CDSs are insurance for the simple reason that they insure the buyer against the default of an underlying security.

And with no fixed supply of raw material, unlike stocks or bonds, bets could be almost limitless.

Once considered a marvellous tool of risk management, CDSs now look as though they will magnify, not mitigate, risk.

Perhaps, argues Tim Bond, a market strategist at Barclays Capital, the falling cost of CDSs is a harbinger of things to come.

Are the investors that trigger this downward spiral by betting on the Greek default via CDSs as harmful to society as governments suggest?

They include banks and hedge funds that have acquired credit-default swaps(CDSS), the cornerstone of the market.

Some $62 trillion of that were credit-default swaps (CDSs), whose supercharged growth continues in spite of the crunch.

Money poured into CDSs (credit default swaps), a financial device that acts as an insurance policy against defaults.

Naked CDSs are the instrument of choice for those who take large bets against European governments, most recently in Greece.

Most CDSs, thinks a bank regulator, will move to exchanges "within a few years" .

But it will also be a test for the dauntingly large market for credit-default swaps (CDSs).

CDSs are unregulated shadow insurance products that investors buy to protect themselves against default of corporate and sovereign bonds.

And what about the idea of "notional value" of the amounts on which the cdss are written?

Haha no wonder CDSS. . . we made use of you and you did that to us too.

By buying a CDSs on Citigroup without owning the corresponding bond, you can bet that Citigroup will default on its obligations.

Indeed, CDSs can be used to take down banks by lowering the confidence in them.

Somehow the world ended up with $62 trillion-worth of credit-default swaps (CDSs), none of them traded on exchanges.

CME's attempts to clear credit-default swaps (CDSs), the most reviled OTC derivatives, have proceeded fitfully.

CDSs are powerful corrective instruments that discipline banks.

Speculators anticipate a sovereign default and speculate in this direction via CDSs.

CDSs are over-the-counter contracts negotiated by two parties.

CDSs are not weapons of mass destruction but instruments of providing discipline and order.

The new red line is now to avoid a credit event for CDSs.

Concern that CDSs are partly to blame for wild swings in financial shares has frayed nerves further.

But naked CDSs have played an important and direct role in destabilising the financial system.

CDSs provide a kind of insurance against the default of a security.

That means some buyers of CDSs, who were betting on default, may paradoxically end up worse off.

Financial eggheads used them as building blocks in "synthetic" CDO-type structures, which are based on CDSs rather than actual bonds.

If counterparties pay up, CDSs are a zero-sum game: what the seller loses, the buyer gains.

If so, banning naked CDSs could end up making it more expensive for governments to borrow.

While CDSs attract speculators, a lot of banks and fund managers buy them as protection against catastrophe.

But what would they mean for credit default swaps (CDSs)?

The problem with CDSs is that their value often overreacts to short-term news without taking into account a firm's long-term liquidity.

ICE's American platform has cleared more than $5 trillion of CDSs.

There are, for instance, already plans for clearing houses for CDSs.

That is because a default would trigger the bond-insurance contracts called credit-default swaps (CDSs).

But what about the sovereign-debt crisis and CDSs?

The value of swaps linked to the agencies' $1. 5 trillion of bonds is unknown, as CDSs are private.

More febrile still has been the popularity of new fangled derivatives with difficult names, such as creditdefault swaps (CDSs).

Another argument I have heard from a lobbyist is that naked CDSs allow investors to hedge more effectively.

Until last year credit-default swaps (CDSs) were hailed as a wonder of modern finance.